Global oil giant Shell will expand its bitumen business on the mainland by 175 per cent through the acquisition of a Hong Kong-based company as it seeks to take advantage of the government's massive rural road-building scheme.
At a press conference in Beijing yesterday, Shell announced it bought Koch Materials China, a subsidiary of American chemical company Koch Materials, for an undisclosed sum.
Koch Materials' six mainland plants have a combined production capacity of 4,200 tonnes of bitumen a day, which will be added to Shell's 2,400 tonnes a day from its five China plants.
Even before the recent launch of its 'new socialist countryside' policy, the government has been pumping billions of dollars into rural road-building.
Thanks to the new policy, mainland demand for bitumen is expected to continue its strong growth of at least 7 per cent a year over the next few years. The country will definitely be the largest market in the world 'in time', according to Shell Bitumen vice-president Egbert Veldman.
Shell's executive chairman in China, Lim Haw Kuang, yesterday said the company had invested roughly US$500 million last year in the mainland, bringing its total investment to US$3.5 billion so far.